Viceroy takes loss on chin

Vancouver — Viceroy Resource (VOY-T) suffered through another year in the red as debt payments and writedowns took their toll on the junior miner.

The net loss for 2000 totalled $45 million (or 78 per share), on sales of $114.2 million. Contributing to the loss was a $30.6-million writedown on the Brewery Creek mine, in the Yukon. By comparison, the company posted a 1999 loss of $56.7 million ($1.05 per share) on sales of $84.5 million.

Viceroy finished the year with a working capital deficiency of $6.2 million, due both to debt accrued at the Bounty mine in Western Australia and reclamation liabilities at the Castle Mountain mine in Nevada. The company is negotiating to restructure the debt and is also trying to raise equity through private placements and asset sales to third parties.

Calgary-based Proprietary Industries (PPI-T) recently entered into a preliminary agreement to assume a 49% stake in Viceroy. Proprietary, which owns and manages a portfolio of financial, natural resource and real estate assets, would subscribe for 28 million Viceroy units priced at 30 each. One unit comprises one share and one warrant. Two warrants would entitle the holder to acquire one share at 35 for two years. The deal would put $8.4 million into Viceroy’s coffers.

“This is a tremendous opportunity for the shareholders of both companies,” says Viceroy Chairman Ronald Netolitzky.

Viceroy acquired the Bounty mine in 1999 from LionOre Mining International (lim-t) for US$24.6 million in cash and shares. At the end of 1998, Bounty hosted proven and probable reserves of 2 million tonnes grading 5.17 grams, equivalent to 331,000 oz. The total resource weighed in at 8.8 million tonnes grading 3.92 grams, equivalent to 1.1 million contained ounces.

An underground mine, Bounty is supplemented by smaller, lower-grade open-pit deposits. The operation features a carbon-in-leach plant capable of processing 750,000 tonnes per year. In 2000, the gold miner cranked out 263,000 oz. from mines in Australia and North America.